Moleculin Biotech Inc (NASDAQ: MBRX) is doing what every other biotech always do – make an announcement to pump the stock then dump on shareholders with a direct offering. We’ve seen this pattern time and time again. It never quits. What really amazes us is the momentum day traders keep chasing these biotechs, only to get trapped holding a bag.
While this move hurts day traders, this is the right move for the company and its loyal shareholders. It is much better to raise money at a higher share price rather than a low one. In this case, management is looking out for its shareholders best interests over the long run and not focused on the short term.
As we take a closer look at MBRX, how does the stock look at current levels?
First up, here’s a little background info for those of you not familiar with MBRX. Moleculin Biotech, Inc. is a clinical-stage pharmaceutical company focused on the development of a broad portfolio of oncology drug candidates for the treatment of highly resistant tumors. The Company’s clinical-stage drugs are: Annamycin, a Next Generation Anthracycline, designed to avoid multidrug resistance mechanisms with little to no cardiotoxicity being studied for the treatment of relapsed or refractory acute myeloid leukemia, more commonly referred to as AML, WP1066, an Immune/Transcription Modulator capable of inhibiting p-STAT3 and other oncogenic transcription factors while also stimulating a natural immune response, targeting brain tumors, pancreatic cancer and AML, and WP1220, an analog to WP1066, for the topical treatment of cutaneous T-cell lymphoma. Moleculin Biotech is also engaged in preclinical development of additional drug candidates, including additional Immune/Transcription Modulators, as well as compounds capable of Metabolism/Glycosylation Inhibition.
Big news in the treatment of lung cancer
The news that got the stock moving from $1 to $3 was positive results of its Annamycin drug. Researchers at The University of Texas MD Anderson Cancer Center were able to demonstrate that Annamycin is able to significantly improve survival in an aggressive form of triple negative breast cancer metastasized to the lungs in animal models. MBRX CEO Walter Klemp said:
“We know that Annamycin was previously shown to be significantly more potent than doxorubicin in both Lewis lung carcinoma in vivo and small cell lung cancer in vitro models. Now we are seeing significant activity against triple negative breast cancer that has metastasized to the lungs. This particular animal model used in our testing is considered to represent a very aggressive form of cancer. We believe our success in increasing the survival rate in mice with this tumor model in combination with the previously observed high uptake of Annamycin by the lungs is a promising indication that supports additional clinical research in lung and metastatic lung cancers.”
FDA Approval of Fast Track Designation
The FDA also approved Annamycin for Fast Track Designation for the treatment of relapsed or refractory acute myeloid leukemia. A drug that receives Fast Track designation is eligible for some or all of the following:
- More frequent meetings with the FDA to discuss the drug’s development plan and ensure collection of appropriate data needed to support drug approval
- More frequent written communication from the FDA about such things as the design of the proposed clinical trials and the use of biomarkers
- Eligibility for Accelerated Approval and Priority Review, if relevant criteria are met
- Rolling Review, which means that a drug company can submit completed sections of its Biologic License Application (BLA) or New Drug Application (NDA) for review by FDA, rather than waiting until every section of the NDA is completed before the entire application can be reviewed. BLA or NDA review usually does not begin until the drug company has submitted the entire application to the FDA
MBRX CEO Walter Klemp said:
“We are thrilled that Annamycin has been granted Fast Track Designation. Not only does this make us eligible for accelerated approval and priority review, but it serves as an important validation of the significant unmet need we are trying to address. Currently, Annamycin is in separate Phase I/II trials in the U.S. and Europe for the treatment of AML and the Company has recently announced positive interim top line data.”
MBRX raised $15 million by selling 9,375,000 units at a public offering price of $1.60 per unit in a registered direct offering. Each unit is comprised of one share of common stock and 0.5 of a warrant to purchase one share of common stock. Each warrant will have an exercise price of $1.75 per share and is exercisable immediately.
Currently trading with a market cap of $54 million, MBRX is an exciting story among biotechs with the potential blockbuster drug Annamycin. If Annamycin can deliver half its expectations, we are looking at a multi-bagger with MBRX. Time will tell, but we certainly like the direction Annamycin is on in terms of lung cancer and FDA approval.
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Disclosure: We have no position in MBRX and have not been compensated for this article.
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